Carbon Clear News

5 reasons why your company should respond to CDP

CDP recently published the materials companies need to be able to submit a disclosure to the 2017 investor led questionnaires (climate change, forests, water). The extent and breadth of this material and the questionnaires themselves may sometimes seem overwhelming.

Our clients often ask us how they can ensure they are getting value from disclosure to CDP and how to evidence that internally. This is relevant if they have responded before or plan to disclose for the first time this year. Here at Carbon Clear we have carried out some work to understand which drivers for responding to CDP carry the most weight to confirm the view that it is an important and necessary reporting framework.

Speaking to leading experts in the sustainability field we asked the question ‘what business value do companies get from responding to CDP?’

Here’s what we found out.

1. Performance benchmarking

Responding to CDP is a great way to track your performance over time and assess your company’s performance against its peers. A CDP score is a quick and simple way to demonstrate sustainability leadership and your contribution to working towards mitigating climate change.

2. Risk management

Choosing to not respond to CDP could possibly result in negative reputational implications. Investors and wider stakeholders may ask why you have not you responded when they have requested that you do? What are you trying to hide?!

CDP scores are now integrated into various investor platforms, such as Bloomberg Terminals and Google Finance, and are a visible marker of your commitment to mitigating and adapting to climate change. By responding to CDP you are providing a clear indication that your company is a forward-thinking business that’s sustainable in the long-term. Further to that, an important area of risk management is the use of CDP to engage the board or other senior management in climate change risks and opportunity planning – using the CDP as an output that engages them and gets it on their agenda.

3. Driving change

The CDP questionnaire reflects changes in the sustainability reporting landscape and reflects accepted best practice in environmental sustainability reporting. For example, in 2015 changes to the GHG Protocol required companies to calculate their Scope 2 emissions using location- and market- based emission factors. Last year the CDP followed suit, requesting the data for location and market based Scope 2 emissions too. CDP questions relating to new reporting requirements often are not scored the first year, giving you a year to test-run your response and the chance to gather data for the next year when it is scored. The CDP drives continuous changes, and companies who continue to respond will have the advantage of being prepared for future reporting developments.

4. Aligning reporting frameworks

The CDP works to align with various other sustainability reporting frameworks in developing policy. For example, The Financial Sustainability Board’s framework for reporting on climate-related risks and opportunities, currently in consultation, may be made mandatory in the future. Companies already responding to CDP will have the advantage of already assessing business climate-related risks and opportunities giving them a competitive head-start when the framework comes into action.

5. Taking action

The CDP partners with various schemes that drive forward activity in sustainability such as the Science Based Targets Initiative and the RE100 initiative. CDP facilitates another channel for businesses to externally communicate their commitment to investors and stakeholders. Not only will your company name be on CDP’s website if you commit to external initiatives but there’s also points to be gained in the questionnaire. These types of initiatives help ensure that meaningful action is being taken to address the risks of climate change and that companies are pursuing the opportunities presented to them though understanding what a resource constrained future may look like.

Responding to CDP doesn’t have to be a chore, and doing it well can help your company to stay on the right track to having a long-term, integrated sustainability strategy that could improve your reputation and ultimately your business operations.

If you would like to know how we can help with your 2017 CDP disclosure contact us now.